As at September27,
2018. A c.0.62% increasefrom$80.66pbon
Sept. 26, 2018

Bonds

The
Bond Market traded on a slightly bullish note, due to a mini rally by some
interested buyers who picked on offers on the longer end of the curve (34s – 37s).
Yields on the long end consequently declined by c.12bps, with trades as low as
15.15% on the 2037s. There were also slight gains on the mid tenors (26s -28s)
which compressed marginally by c.3bps.

We
expect an imminent reversal to sentiments witnessed today,withthe interests on
the long end expected to wane in subsequent sessions. We also expect the mid
tenors to remain favored above the longer tenured bonds.

Benchmark FGN
Bonds

Description

Bid (%)

Offer (%)

Day Change (%)

15.54 13-Feb-20

14.17

13.31

0.00

14.50 15-Jul-21

15.11

14.81

0.05

16.39 27-Jan-22

14.60

14.38

(0.05)

14.20 14-Mar-24

14.98

14.78

(0.04)

12.50 22-Jan-26

15.17

14.89

(0.02)

16.29 17-Mar-27

15.18

15.10

(0.03)

13.98 23-Feb-28

15.22

15.18

(0.04)

12.15 18-Jul-34

15.37

15.20

(0.04)

12.40 18-Mar-36

15.29

15.25

(0.13)

16.2499 18-Apr-37

15.22

15.13

(0.19)

Source: Zedcrest Dealing Desk

Treasury Bills

The T-bills market traded on
a relatively quiet note, with yields ticking higher by c.20bps, despite the
inflows from OMO T-bill maturities and the absence of an OMO auction by the
CBN. This wasas market players remained constrained by expectations for a
retail FX debit and a possible OMO intervention by the CBN tomorrow.

We expect yields to close
the week on a relatively flat note, unless the CBN fails to conduct an OMO
auction, which would consequently result in resurgent buying interests, with a
boost from FAAC payments expected tomorrow.

Benchmark FGN Treasury Bills

Description

Bid (%)

Offer (%)

Day Change (%)

1-Nov-18

13.90

12.35

(0.10)

6-Dec-18

12.75

12.50

0.00

3-Jan-19

12.20

12.00

0.00

14-Feb-19

12.65

12.45

(0.10)

14-Mar-19

12.50

12.00

0.30

4-Apr-19

12.40

12.00

(0.05)

18-Jul-19

13.20

12.45

0.00

1-Aug-19

13.00

12.60

0.00

12-Sep-19

13.20

13.10

0.20

Source: Zedcrest Dealing
Desk

Money
Market

The OBB and
OVN rates crashed by c.11pct to 5.00% and 6.25% respectively, as inflows from
OMO T-bill maturities (c.N261bn) bolstered system liquidity in absence of an
OMO auction by the CBN.

We expect
rates to close the week on a moderate tone, with inflows from FAAC payments
(c.N350bn) expected to moderate outflows for the Retail FX auction tomorrow.
This is however barring a significant OMO sale by the CBN.

Money Market Rates

Current (%)

Previous (%)

Open
Buy Back (OBB)

5.00

16.67

Overnight
(O/N)

6.25

17.92

Source: FMDQ, Zedcrest Research

FX Market

At the Interbank, the Naira/USD rate remained
stable at N306.35/$ (spot) and N361.34/$ (SMIS).At the I&E FX window a total
of $255.28mn was traded in 400 deals, with rates ranging between N358.00/$ -
N365.00/$. The NAFEX closing rate appreciated by c.0.07% to N363.74/$ from N364.00/$
previously.

At the parallel market, the cash rates depreciated
further by 10k to N359.80/$, while the transfer rate remained unchanged at
N362.00/$.

FX Market

Current (N/$)

Previous ( N/$)

CBN
Spot

306.35

306.35

CBN
SMIS

361.34

361.34

I&E
FX Window

363.74

364.00

Cash
Market

359.80

359.70

Transfer
Market

362.00

362.00

Source: CBN, FMDQ, REXEL BDC

Eurobonds

The NGERIA Sovereignsremained significantly
bullish as investors continued to cherry-pick across the curve in tune with the
recent resurgent interests in EM and across the SSAs. Yields declined
significantly by c.15bps across the curve, with the most gains seen on the
2047s which is now below the 8% mark, with a PX gain of c.1.20pct on the day.

The NGERIA Corpsremained bullish, with
investors firmly bullish on the FIDBAN 22s, following the positive results
released recently by the bank. The ticker consequently posted a c.0.50pct PX
gain on the day.We also witnessed renewed interest on the SEPLLN 23s which
gained c.0.30pct, now trading 99.70/100.70.